In The Spotlight

Nominee for Secretary of the Treasury Raised Millions in Soft Money for 2004 Republican Convention

$142 million raised for both parties' conventions in '04

Early press coverage of Henry M. Paulson, Jr.'s nomination for Secretary of the Treasury has referred
to his "hard money" contributions and fundraising, mainly on behalf of Republican party committees and
candidates. Far more important however was his 2003 undertaking, along with 11 other fundraisers, to
raise "several million dollars each"1 in unlimited "soft money" corporate and individual contributions
for the 2004 Republican nominating convention. Mr. Paulson "called around to his colleagues asking them
to contribute to the convention's operating budget. As a [finance] co-chairman he personally agreed to
help raise $5 million to help pay for the convention, according to the host committee."
2

In the end, the New York City Host Committee for the Republican
Convention raised $86 million, $26 million more than its dozen
fundraisers $60 million goal for the biggest and longest TV ad of the
presidential campaign. According to a July 2004 CFI analysis of donors
then listed on the Host Committee website, most of the 62 company
donors had contributed large amounts of now-banned soft money to
Republican Party committees. Nearly a third of company donors came from
the financial sector, leading CFI to conclude that this "reflect[s], in
part, the weight of financial executives, mainly strong Bush
supporters, among the host committee’s chief fundraisers."

Mr. Paulson's fundraising on President George W. Bush's behalf exploited a loophole in tax and
campaign finance law that permits continued solicitation of soft money to underwrite party-designated
election activity, under the fiction that the funds are primarily aimed not at the November election but at the
promotion of the host city's economy and image. Both major political parties benefited from this loophole
in 2004, to the combined tune of over $142 million. CFI has repeatedly called upon the IRS to re-examine
its outmoded policy that allows non-profit tax law to facilitate "multi-million dollar corporate, labor
union and individual campaign contributions to underwrite the infrastructure for a four-night prime time
campaign commercial." It has also called for the FEC and Congress to ensure that convention expenses are
paid with money raised by party committees within the "hard money" contribution limits (which also exclude corporate
and union donations) along with traditional state, local and federal government grants.
(To see CFI's most recent press release on the subject and June 1, 2005 letter to IRS Commissioner
Mark W. Everson, click here).

1 Randal C. Archibold, "G.O.P. Quick to Get Big Donors to Cover Cost of Convention," New York Times, June 19, 2003, p.1

2 Michael Slackman, "Wall Street to Toast Its G.O.P. Overseers During Convention," New York Times, May 21, 2004.

The Campaign Finance Institute is a non-partisan, non-profit institute
affiliated with the George Washington University that conducts
objective research and education, empanels task forces and makes
recommendations for policy change in the field of campaign finance.
Statements of the Campaign Finance Institute and its Task Forces do not
necessarily reflect the views of CFI's Trustees or its financial
supporters.